Credit is the ability to borrow money from a lender with the understanding that you’ll be paying it back later, often with an interest payment associated with it. Lenders are only going to feel comfortable enough to give to those that they are confident will pay them back sooner rather than later. It’s important that over time you build up that trust, which will be reflected in your credit score.
Your credit score really ends up saying a lot about you to lenders, even if you know there are reasons it reflects negatively on you. Reports are put together and maintained by three independent credit bureaus, these being Experian, TransUnion, and Equifax. All creditors should be voluntarily reporting your borrowing and repayment actions to the credit bureaus, whether they be credit unions, banks credit card issuers, or any other creditors nobody is exempt or going to purposefully not report your activities. Your credit score is a huge factor when it comes to getting loans or credit cards, especially with low interest.
You must maintain good credit if you want to be able to get loans or credit cards, especially in short notice under emergency situations. Truly the number of reasons you want good credit are limitless, but we’ll focus on only the most critical. It’s important to have credit available to help you out with big purchases like a car or a home, most people don’t have the money on hand to directly finance these things themselves. On top of that, a credit card offers you a lot of convenience and a lot more protection over something like a debit card, and you need average to great credit to get one. A higher credit score also comes with the perks such as being able to get the lowest available interest rates on credit cards, plus other rewards and bonuses.
You need to work with a credit advisor to ensure you are rebuilding your score properly. The best thing you can do for yourself, even if you don’t have credit, it just go get a credit card and make some small purchases on it each month – enough that you know you can pay it off in full every month. Then either after every purchase or on a set day every month you need to pay your card off. This will help you figure out how to get good credit!